Microsoft Vies For Piece Of iPod Pie

Microsoft Corp. is preparing to roll out a portable digital music player later this year, an apparent bid to capture a slice of the market now dominated by the iPod, music industry executives say.

The world's largest software maker has been briefing record companies on the proposed device that would play digital music and video files and carry wireless technology, enabling users to download music without linking to a computer, according to executives who spoke on condition of anonymity because plans for the player have not been made public.

In addition, Microsoft has engaged in talks to secure licenses to sell digital content for the device, the executives said.

It was unclear if the company intended to augment its existing online music service, MSN Music, or build a new one.

Sally Julien of Edelman, one of Microsoft's public relations firms, declined to comment Thursday.

Until now, Microsoft has stayed out of the digital music player market while licensing its Windows Media Player technology to Creative Technology Ltd., iRiver Inc., Samsung and other device manufacturers.

But those companies have struggled to compete with Apple Computer Inc.'s line of iPods, which have dominated the market partly because of their seamless integration with the iTunes Music Store.

IPods account for roughly 80 percent of the portable music player market, while iTunes has sold more than 1 billion tracks since it launched three years ago.

"The combination of the independent manufacturers trying to use the Microsoft technology to integrate with independent vendors such as Napster, Yahoo Music and Rhapsody ... has resulted in an experience for the consumer that simply does not measure up to the experience of the iPod and iTunes," said Phil Leigh, an analyst with Inside Digital Media.

The stakes for Microsoft extend beyond the online music market, Leigh said.

"It's becoming increasingly evident that video is migrating to the Internet, and Apple is getting a lead there as well," Leigh said. "That is a lead that Microsoft cannot afford to let them build upon and maintain."